The MLS environment

Why this matters: Review the historical and current practice of a buyer broker to earn and be paid their fee on a transaction when representing a buyer-client.

The decoupling of commingled MLS and AOR memberships

A broker representing a buyer to locate suitable property and negotiate acquisition of a selected property is commonly referred to as a buyer broker, the “agent of the buyer.” In turn, an agent employed by the buyer broker to act on behalf of the broker representing the buyer is technically the “agent of the buyer-client’s agent” and is referred to as a buyer agent. [See RPI Form 305 §3; Calif. Civil Code §2079.13(n)]

Historically, and incorrectly, the buyer broker and their agent representing a buyer were, in earlier times but no longer, referred to as subagents, selling agents or cooperating agents. These misnomers for the buyer broker/agent were the erroneous nomenclature of the pre-21^st century multiple listing service (MLS) fee-fixing environment. These references were promoted by big broker operators and maintained by Association of Realtors (AOR) rules and arbitration through the MLS owned by the AOR.

The MLS as the center of transactional activity was all about keeping fees as high as the public can bear without collectively protesting. At the genesis, it was said all brokers (and their agents) as subscribers to the local AOR-operated MLS were automatically “agents of the seller.” However, they were not and are not, unless the buyer broker is conflicted as a dual agent also representing the seller’s best interests.

In a three-party scheme, big brokerage offices forced all their agents to join both the local AOR and the MLS owned by the AOR. However, the AOR membership was in no way needed for the agent or their broker to earn fees on transactions they were licensed by the Department of Real Estate (DRE) to facilitate for consumers.

Incorrectly coupling licensure with AOR membership

However, due to necessity, agents must have MLS access to either market or locate properties available for sale. Without access, transactions require less efficient sources for marketing or locating inventory, such as newspapers, fliers, caravans and group marketing sessions independent of MLS sponsorship.

However, the hangup installed was the local AOR owned and operated the only MLS in town, until around 2000. For buyer brokers and their agents to access the MLS database of inventory available for sale, submit offers and get paid a fee, they were required by rules of the MLS (set by the AOR) to become a member in the local AOR. The MLS was the only source of market information and data, until the first days of the 21st century.

The (not so) secret MLS

Thus, an inescapable requisite to either marketing a property for sale (as a seller broker) or locating a property available for sale (as a buyer broker) was dual membership. To convenience the coupling, the two memberships were bundled as one event, with no viable alternative for anyone wanting to earn a living as a DRE licensee. Thus, a DRE-licensed broker or agent was unable to make a living representing sellers or buyers without first becoming an AOR member, part of the racketeering of large operators to control the amount of transactional fees.

Suddenly, for the agent, the cost of entry and remaining in the business was very expensive, benefitting only the AOR, its MLS and big brokers. The agent labored and paid dearly to allow others up the chain of command to simply maintain the MLS-AOR fee-fixing regime. The consuming public — sellers and buyers — paid for the agent’s assistance, but little of the money they paid for services remained with the front-line agent.

All this structure started to fail fast after the turn of the century in 2000. Previously secret MLS information was hoovered up by the internet and made available to anyone with a computer by a click to browse for property for sale online. Today, only one membership is needed and allowed by a licensed broker to conduct licensed activities: any MLS operation competitive enough to get the broker’s business.

As California code declares, each broker individually sets their fee

The respective positions of a seller broker and a buyer broker in a transaction are adversarial, which is why a dual agency is very risky for all involved.

Today, all buyers engaging a buyer agent to assist in locating and acquisition of an interest in any type of real estate enter into a buyer representation agreement employing the agent’s broker. The agreement, negotiated by the buyer agent, states the fee their broker earns on a transaction entered into by the buyer-client.

No longer does the MLS publish the percentage fee the seller broker offers to pay to the buyer broker to “sell” the property, the now extinct selling office (SO) signal. More fundamentally, the seller broker may not concern themselves, in any way, regarding the amount of the buyer broker fee.

Further, and the linchpin, is the AOR may no longer penalize a seller broker for setting fees below the AOR’s agreed-to standard minimum fee. However, this conditioning remains today via peer pressure conversation among brokers to consciously maintain — hold the line on — a minimum fee for each broker involved in a transaction.

Related article:

Confronting the illegal practice of price-fixing fees in 2025 — California style

Representing the best interests of the buyer

Representing the buyer requires the agent to locate suitable property and, with care and diligence, advise the buyer on the nature of a property selected for purchase — primarily any property conditions adversely affecting the buyer’s use of the property and its value. Further, the buyer agent seeks the most advantageous price and terms available to the buyer when negotiating to acquire a property.

No longer are buyer agents concerned about upsetting the seller broker and possibly interfering with fee-splitting arrangements by:

demanding property information mandated to be delivered by the seller and seller broker; or
bargaining on price.

Today, the bully factor, while present, has a diminishing role between transaction agents regarding property information and fees. Every agent receives training to set their own fees without dependence on the other broker for payment.

Chaotically, a seller broker retained to sell a property might at the same time represent a buyer interested in buying the seller’s property. Here, the seller broker is also the buyer broker, wearing two hats. It is a dual agent predicament in a transaction on property the seller has retained the broker to sell to a buyer who has retained the broker to buy.

This is a risky conflict of interest which is fully disclosed to all participants, including any mortgage lender. However, disclosure does not in any way eliminate the conflicting duties owed to the diametrically positioned participants in a transaction — though restrictions on personal information do exist. [See RPI Form 527]

Related article:

Buyer representation, dual agency and double ending

No trade association membership required

Today in California, no MLS subscriber need be a member of any trade association to publish the availability of property for sale or access the market-wide inventory of available property. Due solely to regulatory oversight encouraging competition in the market for MLS operations, what is now available online is extensive MLS database history on properties for sale or otherwise, even when the MLS is owned by the local AOR. Thus, an MLS subscriber avoids the suppressive instrumentality of trade association membership. [Marin County Board of Realtors, Inc. v. Palsson (1976) 16 C3d 920]

Yet, many real estate licensees are taught by influencers used by big brokers as coaches for licensing and training. These coaches still erroneously teach new agents they need to join the National Association of Realtors (NAR®), the California Association of Realtors (CAR®) and the local AOR to “effectively practice” real estate in California. Worse, the trade union leviathan is too often falsely equated to the DRE by cloistered licensees due to the trade union’s past inappropriate top-level political liaisons. But the past couple decades of bureaucratic commissions have greatly reduced the perception one is the arm of the other.

For a real estate sales agent, the obligation to become a trade union member depends on their broker’s type of membership with the AOR. The agent is to parallel the broker’s membership or non-membership in the AOR since the sales agent acts on behalf of their broker — an agent of the agent.

For access to the MLS, AORs now give brokers the option of being:

an AOR member, which includes CAR® and NAR® membership along with MLS subscription; or
only a subscriber to the AOR-affiliated MLS.

No restrictions apply to MLS access for real estate brokers. Real estate brokers and their agents now have full access to an MLS. Thus, they avoid paying excessive and unnecessary dues or entanglement in a trade union’s membership bureaucracy, codes and arbitration rules, remaining subject only to overriding review of their licensing status by the DRE.

Selling agent, an obsolete term eliminated by codes

In prior years, “selling agent” or selling office (SO) was the misnomer used within the real estate industry to refer to the agent working with the buyer. Not today. Words with plain meaning in ordinary English are now used. No secondary meaning need be known to the consumer to understand jargon established to perpetuate the fee-fixing scheme.

Today, a buyer agent — not a seller agent unless acting as a dual agent in expectation of double ending fees — enters into a written buyer representation agreement when their buyer-client retains the broker to assist in the acquisition of an interest in any type of real estate. [See RPI Forms 103.1 and 103.2; CC §1670.50]

The buyer representation agreement provisions require upfront disclosure of a negotiated brokerage fee the buyer agent is paid for achieving the acquisition of a property. Further, the writing establishes the buyer’s obligation to pay the fees when the seller refuses to pay the fee the buyer broker earned on the transaction. In either circumstance, the buyer broker fee is always part of the total purchase price the buyer pays to acquire property.

The buyer representation agreement is entered into by the buyer agent:

as soon as practicable (ASAP) after determining with a prospective buyer that the buyer is retaining the agent to represent them as the agent’s buyer-client for the agreed fee; and
always before the buyer signs an offer the agent is to submit to acquire an interest in a property. [CC §1670.50(a)]

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